Medicare Part D Benefits Explained

Medicare Part D is the part of Medicare that offers prescription coverage. You can only obtain coverage through private insurance companies. Medicare has standardized the benefits so that each plan offered must meet minimum coverage requirements.

If you decide not to enroll when you first become eligible, and don’t have other creditable prescription coverage (a drug plan at least as good as Medicare Part D), you will likely pay an enrollment penalty when you finally do enroll. Go back to the main Medicare Part D page for information about eligibility and enrollment.

Total Costs for Medicare Part D

• Premium – If you have a stand-alone prescription drug plan (one that is not part of a Medicare Advantage Plan), you will pay a monthly premium for the plan.
• Deductible – If your drug plan has a deductible, it is the amount you must pay before the plan pays its share of covered drugs. The deductible is an annual cost, and is starts over at the beginning of each year.
• Copays – For prescriptions covered under your drug plan, after any deductible is met, you pay a copay, and the plan pays their portion. Drug copays vary from plan to plan.

Formulary

A formulary is a list of drugs covered by a particular drug plan. Each drug plan has its own formulary. Drug plans do not have to cover every drug on the market; however, Medicare has made rules that ensure drug plans offer a minimum of options for most categories of illness.

It is important to compare a plan’s formulary to the list of drugs you currently take, before enrolling in a plan.

Prescription drug plans place drugs on different price levels, or “tiers,” within the formulary. Tier 1 is the least expensive, and Tier 4, the most expensive. A drug’s tier may vary from one drug plan to the next.

Coverage Gap (Donut Hole)

Once your total annual drug costs (your out of pocket costs, plus the plan’s share of costs) reaches $2,840 (for 2011), you’ve reached the coverage gap.

Before healthcare reform, this would mean you would pay 100% of drug costs from $2840, up to a total of $4,550 annual out of pocket costs, before catastrophic coverage kicks in. Now, thanks to healthcare reform, there is some help in this coverage gap. Starting in 2011, you get a 50% discount on covered (in the plan formulary) brand name drugs. Once you reach $4550 in drug costs, you pay only a small copay for each drug for the rest of the year.

Extra Help

You may be eligible for help paying for your Part D premium, or your drug copays. You may have received a letter notifying you that you automatically qualify for a low-income subsidy (LIS). If you are not sure, or want to apply for extra help, visit www.socialsecurity.gov, call Social Security at 1-800-772-1213, or call Medicare at 1-800-633-4227.

For more information on enrollling in a Part D plan, go back to our Part D page, or visit our Part D plan page for plans offered by Senior Insurance Services.

For help, call:

Pamela Cook
CA Insurance 0G04182
Toll Free 888.520.8683

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